Bitcoin is poised to be a digital currency that can be used broadly ranging from daily purchase transaction to international money transfer. However, based on the current analysis, bitcoin is unsuitable for such kind of tasks due to the intrinsic flaws in the bitcoin protocol.
In the bitcoin protocol, each transaction will be broadcasted to the whole bitcoin network, once confirmed by a certain number of nodes, the new transaction will be stored in a new block permanently. Currently, each block is generated in about 10 minutes with the block size of 1 MB. This only allows about 7 transactions per second. For Visa credit card, currently it handles 2000 transactions per second with a peak value of 4000 transactions per second. If bitcoin is really poised to be a world currency, its protocol needs to scale 600 times.
The most common proposal to increase the scalability of bitcoin network is to increase the size of the blockchain. The blockchain can be increase to 2 MB or even 20 MB. However, there are significantly downfall of this approach. First, it still won't be able to scale 600 times. Second, increasing the blockchain size will slowdown the network tremendously, let alone the increased storage.
More creative solutions for this problem is crucial for making bitcoin a mainstream success.
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